Wednesday, 25 May 2011

Here are some of the economic reforms that turned the horde of Genghis Khan into a steamroller than flattened most of the world's kingdoms/empires.* He:

Delayed gratification. He banned the sacking of the enemy's camp/city until all of the fleeing soldiers, baggage, etc. were rounded up. This radically increased the loot accumulated and ensured it could be shared among all of the participants (he confliscated the wealth of those men that cheated by looting early).

Systematically shared the loot based on contribution and merit. He disregarded title or status and systematically rewarded loot to everyone in the horde that earned it (the traditional approach was to let a few take it all -- sound familiar?). Of course, that fairness pissed off the nobility since they were used to backroom dealing and hereditary rights. However, the benefits of this system, were far greater than the costs. To wit: He cemented the loyalty of the men and was able to attract thousands to his banner for every noble lost.

Protected those that make sacrifices. For men killed in the campaign, he paid their share of loot to their widows/orphans posthumously.

*of course, the first unsaid lesson is: attack the places with the most loot.

The economic strategy of Genghis Khan works well against any corrupt, top-heavy system (loot rich targets that are defended by nobility + serfs). Sounds somewhat similar to today's global economic formula. Of course, it's also important to view this simple but effective strategy as something apart from the figure that used it. For example, a decent/moral decentralized system that replicates this merit based approach could reproduce some of the success Genghis had against the feudal holdings and petty tyrannies of today's marketplace.

Monday, 23 May 2011

Corporations haven't changed much organizationally since the middle ages. They're dinosaurs. It's time to turn them into history, where they belong.

As part of the new venture I'm working on, we're developing a set of new rules that allow a new form of corporation that operates without much of a hierarchy. Further, it connects work with reward in a way we haven't seen in the US for countless decades. We think these changes will make these new organizations superior to our current corporate competition -- both from the perspective of the person working with (not for) us and from the ability of these ventures to compete with the status quo.

At this point, the organization we're building is the equivalent of the first mammal. Very, very small relative to competition (the dinos that ruled the earth for hundreds of millions of years) but incredibly adaptive. The rules of adaptation we're developing will help us stay alive, and eventually (we hope) defeat the competition. We hope you'll decide to evolve along with us.

Here's the first rule we think is important: if at all possible, use entrepreneurial superempowerment.

Essentially, this rule is torn from my book on global guerrilla warfare. The same amplification that makes it possible for small groups of terrorists/guerrillas to do incredible damage/challenge nation-states can be used to build a successful organization. In short, this rule means that you should provide the people working with your organization all of the tools they need to be economically successful. In particular, these tools need to be networked tools. Tools that amplify every action taken by 1,000 fold.

Further, on a motivational level, these people should be allowed to innovate. To become entrepreneurs that are constantly striving to maximize their potential. Allow them the flexibility to try new ideas, change up the processes used, and pioneer new areas for expansion. The objective is to fill your entire organization with superempowered entrepreneurs.

Friday, 20 May 2011

The most likely scenario for the next decade starts with the resumption of global economic depression (D2). Economies shrink. Wealth evaporates as former "assets" become worthless. Commodities fall (even energy) due to declines in economic activity. Currencies gyrate, explode, and/or evaporate.

In this environment, sovereigns will begin to default as the industrial nation-state model runs out of gas. Developed nation-states will find themselves crushed between bailouts of their cronies and excess spending (i.e. social spending (EU), national security spending (US), or mercantilist over-investment (China). Developing nations will just implode.

Things will continue on this track until one of two things happen:

things really begin to fail (complete system breakdown) or

new, better economic and social systems become viable as replacements to our broken one.

I'm betting on new economic and social systems. Part of that bet, and something many people now get, is accomplished through the establishment of self-reliant resilient communities. However, resilient communities aren't a sufficient replacement, in and of themselves (unless you want to turn back the clock to the 1800s). By themselves, they don't represent a superior alternative to a failing and flailing global system. Something else is needed, but what?

It's simple. What's needed are (note the plural here), virtual global economic systems built on a sound footing (i.e. better and more sensible rules than we currently have), prosperous participants, and a hard currency. Systems that people can flee to when currencies become scarce (deflation) or worthless (inflation) or nation-state political systems fail (corruption/crime) or flail (repression).

My advice to you: when you see a system that looks like the one outlined above, start to diversify your economic activity into it as soon as is practicable.

Saturday, 07 May 2011

Increasingly, the energy we consume to heat and power our communities, will be produced locally. Unfortunately, many of the strategies we use to produce energy are vulnerable due to specialization. We are too dependent on specific forms of energy and the dedicated equipment used to utilize it.

One of the methods I recommend to reduce that vulnerability is to use microgrids. Microgrids are essentially a local controlled electricity network that makes it possible for communities to create dynamic local markets for electricity production and consumption that can zoom innovation and investment. When we first began to talk about microgrids, the technologies involved were merely plans on paper. Now, a mere three years later, we see offerings from many major technology companies (with the potential of open source projects that can open up this tech for everyone).

So, let's repeat the process with another forward looking technological innovation that will add to local energy resilience, production, and innovation. The technology is what I'm calling omnivorous energy (which is obviously a placeholder name until the tech emerges). Here's what omnivorous energy entails.

A truly resilient strategy for the local production of energy (both heat and power) should be able to consumer nearly any type of fuel. In essence, our energy consumption strategy needs to be omnivorous -- it can eat anything. Currently, the vast majority of the energy we consume is produced through purchasing and running dedicated systems -- i.e. furnaces that burn natural gas, oil, or wood. Also, these systems must be able to produce a range of outputs, from heat to electrical power as needed.

Why is this strategy better than the one we use currently? In a world of flux and potential breakdown, all the assumptions we currently have on pricing and availability of energy go out the window. Shortages and price spikes will be commonplace but the need for energy will be constant. So, in order to mitigate this vulnerability we need to become locally omnivorous (or, in others words: scale invariant in terms of energy).

What does this omnivorous energy production look like? It takes three elements:

Friday, 06 May 2011

Here's a challenge to the dominant perspective that hopefully get's you thinking (after you get over being pissed off):

Great. Osama's dead. Good job to my former compatriots in tier one. Unfortunately, Osama may have already won strategically (see Boyd on al Qaeda's Grand Strategy for more) by the time they got to him. How? He was able to cause an over reaction whereby the US did serious harm to itself. Here's the run down. You decide.

$3 Trillion in expense and thousands of lives fighting two optional wars that helped plunge the US gov't in fiscal crisis. Osama's attack made it possible for defense and homeland security spending to skyrocket to levels not seen since the darkest depths of the cold war (where we were in a struggle with a global superpower). The US now spends as much on defense as the rest of the world combined with little expectation that this spending will be reduced.

Osama was able to force the US into creating a masssive internal security apparatus (the Homeland Security Department) that is still growing rapidly. It now represents the largest internal security market in the world and is a hefty tax on all productive economic activity.

A perpetual state of emergency has been declared in the US. Liberties have been suspended indefinitely. Technological scanning of communications and data is not under any meaningful oversight. Anybody can be held indefinitely w/o trial or commication. Anbody can be tortured through rendition. The President can even designate any American an enemy combatant (a list of people we can expect to see grow rapidly over the next decade), which means that they can be killed on sight w/o trial or due process.

Every organism/system consumes energy to live/operate. There are a variety of different strategies for optimizing or maximizing the consumption of energy, but they boil down into two categories:

The generalist (aka The Omnivore). Able to consume a wide variety of energy although at an efficiency penalty.

The specialist. Able to access and consume a very narrow type of energy in a highly efficient way.

In periods of environmental (the overarching system within which these organisms/systems live and compete) stability, an ever greater number of specialists emerge and potentially dominate. Why? Specialization can:

offer access to extremely dense and high value sources of energy

it can provide protection from competitors (few competitors will have the specialization necessary to access it)

However, when the environment is in a period of rapid flux, specialists can rapidly become extinct. Simply: its favorite sources of energy can dry up or become inaccessible as conditions change. In contrast, the generalist or omnivore, can thrive when the environment is in flux. Given their ability to access and consume nearly anything (despite, sometimes steep, efficiency penalties) they will nearly always find a source of energy to subsist on even if big changes have occurred. They thrive at the same time the specialists die.

So, what does this mean to those of us thinking about resilience?

We're living through a period of rapid change. Flux. Things are going get very different much quicker than most people assume. As a result, we need to adopt more of an omnivore strategy in regards to nearly everything we do. For example:

Skills. The more specialized your role/job, the less valuable and/or useless you are in the future. Re-skill. Broaden your knowledge. There will be few things more pathetic (albeit hilarious) than seeing a former $500 an hour lawyer or Wall Street Tycoon in a breadline.

Investments. An omnivorous investment strategy isn't hedging. Hedging still assumes most of what you own is still considered a financial asset. An omnivorous investment strategy puts resources into communities and technologies that will be there even when most financial assets are imploding.

The US middle class is broken. A hollow husk unable to withstand the slightest gust. Regardless, it's the ultimate source of demand for the global economy. It's an immovable barrier.

When oil hits ~$150 a barrel the impact occurs between inexorable force and immovable barrier. The combo of higher prices at the pump and for everything else (food and other essentials) starts to crush middle class budgets and force defaults. The economy shrinks until the price of oil goes down enough to be affordable again (for those still left in the middle class).

We keep repeat the pattern above until we're in the second depression (D2). Long term low demand.

On Brave New War

G. Gordon Liddy Show (radio)...this is a seminal book in the truest sense of the term.. way ahead of the curve... go out and buy it right now -- G. Gordon Liddy

City JournalRobb has written an important book that every policymaker should read -- Glenn Reynolds (Instapundit)

Small Wars JournalWithout reservation Brave New War is for professional students of irregular warfare and for any citizen who wants to understand emerging trends and the dark potential of 4GW -- Frank Hoffman

Scripps Howard News ServiceA brilliant new book published by terrorism expert John Robb, titled "Brave New War," hit stores last month with virtually no fanfare. It deserves both significant attention and vigorous debate... - Thomas P.M. Barnett

Chet Richards DNIJohn has produced an important book that should help jar the United States and other legacy states out of their Cold War mindset. You can read it in a couple of hours – so you should read it twice...

Washington Times / UPIRobb correctly finds the antidote to 4GW not in Soviet-style state structures such as the Department of Homeland Security, but in decentralization -- William Lind (the father of 4th generation warfare).

Robert PatersonHaving painted a crystal clear picture of how a war of networks is playing out, he comes to an astonishing conclusion that I hope he fills out in his next book.

The Daily DishJohn Robb of Global Guerrillas has written the most important book of the year, Brave New War. - Daily Dish (The Atlantic)

Simulated LaughterWell-written. Brave New War reads more like an action novel than a ponderous policy book. - Adam Elkus

FutureJackedGo buy a copy of this book. Now. If you are low on cash, skip a few lunches and save up the cash. It is worth it. - Michael Flagg

ZenPunditThe second audience is composed of everyone else. Brave New War is simply going to blow them away. - Mark Safranski

Haft of the SpearThere aren’t a lot of books that make me recall a 12-year-old self aching for the next issue of The Invincible Iron Man to hit the shelves. Well done.
- Michael Tanji

Ed ConeHis book posits an Army of Davids -- with the traditional nation state in the role of Goliath. - Ed Cone (Ziff Davis)

Shloky.comThis is the first real text on next generation warfare designed for the general population and it sets the bar high for following acts. It is smart, it is a short read, and it will change your thinking. - Shlok Vaidya

Politics in the ZerosI suggest this is something Lefties need to start thinking about now, as that decentralized world is coming. - Bob Morris